All posts by Michelle Mosser

Questions raised about Santa Fe public bank

By T. S. Last / Journal Staff Writer | The Albuquerque Journal | November 21, 2017

SANTA FE – One thing was clear from a public forum held by the city of Santa Fe’s Public Bank Task Force, formed to research and identify barriers to forming a public bank: It won’t be easy.

On Monday, the task force presented findings so far made by four subcommittees addressing legal issues, regulations, capitalization and governance of a proposed public bank, then heard comments and questions from about a dozen of the 40 or so people present. Several of them expressed doubts about the viability of a public bank – a bank owned, operated and funded by a government entity.

While the subcommittees laid out many of the challenges the city would face if it were to form a public bank, one in which the city, at least initially, would be the only client, some skeptics in the audience raised other concerns.

Citing a recent audit that showed the city was susceptible to fraud and theft and an audit in 2015 that determined $2 million of a $30 million parks bond was misspent, Berl Brechner said the city should abandon the idea altogether.

“This process has gone farther than it should have,” he said.

A city-financed feasibility study done last year determined that a public bank could potentially improve fiscal management, create a healthier local lending climate and generate better interest rate margins for the city. Earlier this year, the City Council passed a resolution to form the task force to assist the council in making an informed decision about the city applying for a bank charter through the state.

But it’s not clear whether that’s even possible. As the regulatory subcommittee observed, there’s uncertainty over whether the bank would violate the state’s anti-donation clause, which prohibits a government from lending its credit. That committee also noted that the FDIC had concerns about issuing deposit insurance to a domestic governmental unit.

While the committee did not respond to Brechner’s comment, the next speaker did.

Charles Koenig said the Bank of North Dakota, one of the few public banks in America, has turned a profit every year since in was formed in 1919. And the profits didn’t go bankers or anyone on Wall Street, he said.

“If we can establish a public bank in Santa Fe, we can generate profits for the city,” he said.

The task force will present its findings to the Finance Committee on Dec. 4. A final report will be submitted to the City Council early next year.

Forum on public bank proposal set for Monday

By T. S. Last / Journal Staff Writer | The Albuquerque Journal | November 17, 2017

SANTA FE, N.M. — Already halfway through its six-month exercise to examine what next steps need to be taken to establish a public bank in Santa Fe and identify potential barriers, the Public Bank Task Force will hold a public forum on Monday to gather input to be included in an interim report that will be presented to the City Council’s Finance Committee on Dec. 4.
The council passed a resolution earlier this year to establish the nine-member task force so the council can “make an informed decision about submitting an application for a New Mexico Bank Charter for a Public Bank in Santa Fe,” but the idea has been in the works for a few years.

In September 2014, WeArePeopleHere!, a nonprofit group that describes itself as “a grass-roots progressive political action collective,” put on a symposium hosted by Mayor Javier Gonzales exploring the concept of creating a city-owned community bank.

A few months later, the City Council approved a $50,000 contract to conduct a feasibility study that ultimately determined a public bank could potentially improve fiscal management, create a healthier local lending climate and generate better interest rate margins for the city. But some critics are skeptical of the idea and whether a small city like Santa Fe can make a public bank work.

At least initially, the city would be the public bank’s only client. The report said the bank could serve the city by funding capital improvement projects with internal funds without raising taxes or using bond proceeds.

According to a news release, David Buchholtz, an attorney with experience in finance and banking who serves as the task force’s chairman, will provide an update on the committee’s progress to date, and four subcommittees will report on what’s been learned so far, address ongoing research and legal issues, banking regulations, public bank capitalization and governance. But the majority of the 2½-hour meeting will be devoted to “questions and an open dialogue with members of the public about what they would like a Public Bank to achieve for our community.”

The forum will take place from 5:30 to 8 p.m. Monday in the City Council chambers at City Hall.

Task force says city faces many hurdles to creating a public bank

By Tripp Stelnicki | The New Mexican | November 20, 2017

Whether there will someday be a Public Bank of Santa Fe was not decided Monday night, but concerned community members got an earful of the myriad regulatory and capitalization hurdles that must be resolved or further studied before such an initiative — or even an application for one — could move forward.

At a forum in City Hall, the city’s Public Bank Task Force reported on its ongoing investigation into whether the city should establish a chartered public bank, presenting an unvarnished view of the potential stumbling blocks they have intensively researched since August.

Many of the roughly 40 community members in attendance might have hoped for more validation of their interest in the idea, one advocates say could reduce debts and generate income for the city while removing the necessity of outside banking giants.

But the task force progress report came in shades of gray, revealing the path to a prospective public bank is cluttered with potential obstacles and concerns requiring more clarity, from whether the city has the statutory authority to establish a public bank, to whether some functions of a municipal public bank would violate the state’s anti-donation clause, to whether the city has enough money available to get a bank off the ground.

“The city has to have the unrestricted liquidity to make this work,” said Randolph Hibben, a task force member with experience in community banking. “I don’t believe it does.”

Many aspects of the public bank proposition have not yet been determined, including how its independent governance would be established; how it might be staffed, operated and governed; and whether its functions might be limited to the city and other public institutions or might be expanded into a broader community model. These and other regulatory concerns remain to be studied further, task force members said.

“We’re deep into it,” said David Buchholtz, an Albuquerque attorney who chairs the panel. “Do we have all of our answers yet? Probably not.”

Tasked with identifying the pros and cons of a public bank and then delivering “the information needed to make an informed decision” to the City Council in early 2018, the nine-member volunteer task force recommended by Mayor Javier Gonzales and approved by the council has met regularly since August.

Monday’s forum marked the first wide-ranging checkup on the progress made by the advisory panel and its various subgroups.

Their work follows a feasibility study authorized by the City Council in 2014 and completed early last year.

That analysis determined the city could save money if a public bank were established but cautioned any initiative ought to start small and emphasize transparency.

Whether the task force is expected to deliver to councilors a recommendation one way or the other or simply a report on their analyses is unclear. Buchholtz said he would seek clarity from councilors on the Finance Committee in December.

Contact Tripp Stelnicki at 505-428-7626 or tstelnicki@sfnewmexican.com.

Unanimously Approved

Good for our City Council. Members have unanimously supported a task force to develop a public bank. Why should we keep paying interest into the great maw of Wall Street when we can pay interest to ourselves and use the money to help our community? Thanks to the late Craig Barnes and his group We Are People Here for developing this proposal.

Mari GranaSanta Fe

Three Excellent Reasons

I support a public bank for Santa Fe, and so should you. Knowing where your tax dollars go to work in our city (transparency), turning the debt burden that we now pay to Wells Fargo into dollars for use in public work projects (leverage), and developing a boundary between city government and management of the bank by professional bankers (accountability) are three excellent reasons to take control of our finances to contribute more locally to the public good.

Diane PinkeySanta Fe

Coaxing Councilors

City Councilor Renee Villarreal has introduced a substitute resolution developed by Banking On New Mexico, the Brass Tacks Team, city councilors and city staff calling for the creation of a task force to help establish a public banking task force. The task force will provide needed information about questions not addressed in the 2015 feasibility study. You will find the resolution on the city’s website at www.santafenm.gov/legislative_services. I look forward to the full council moving this resolution forward.

A chartered public bank — managed by bankers, not the city — would use money paid to the city in our community taxes, fees and fines to fund our own community needs. It would keep our money circulating in Santa Fe; the interest would stay in our local economy.

For more information, go to the informative website: bankingonnewmexico.org.

Communicate with your city councilors and urge this prudent next step.

Pam GilchristSanta Fe

Addressing Inequalities

Many thanks to Councilor Renee Villarreal for her vision and persistence in pursuing the investigation of a public bank for Santa Fe. Thanks also to Councilors Joseph Maestas, Carmichael Dominguez, Signe Lindell and Peter Ives for co-sponsoring the resolution to create a task force to map out the steps required for the public bank.

As we learned at last week’s Interfaith Dialogue on Economic Justice at Temple Beth Shalom, public banking is a way to democratize our economic and financial system and to begin to address the economic inequalities in our community. A Santa Fe public bank could create money in the same way that other chartered banks do, through fractional reserve lending, and harness this money for the public good, instead of for private profit. By creating a public bank, Santa Fe can be a leader in implementing a moral and ethical approach to money and economic justice.

Leslie Lakind, D.D.S.Santa Fe

Leaning In

Banking on New Mexico has worked long and hard championing a Public Bank of Santa Fe. Several years ago, this dedicated nonprofit convinced the City Council to invest in a public bank feasibility study. That study affirmed that it could be done and would be of great financial benefit to Santa Fe.

A task force must now present the “ways and means” to actualize a public bank. At the April 26 City Council meeting, Councilor Renee Villarreal will introduce a resolution that creates that task force. Santa Fe residents can show support for this historic undertaking by attending that meeting.

Thanks to Councilor Villarreal for introducing this critical resolution and thanks to her co-sponsors, Councilors Joseph Maestas, Carmichael Dominguez, Peter Ives and Signe Lindell. As the nation’s politicians appear determined to drag the country backward, it’s heartening that our local officials are leading Santa Fe into the future.

Gershon SiegelSanta Fe

Finding Economic Justice

Recently, Santa Fe community leaders (Mayor Javier Gonzales, Rabbi Neil Amswych, Sensei Joshin Byrnes, Councilor Renee Villarreal, Elaine Sullivan of Banking on New Mexico) spoke on “Economic Justice in Santa Fe” and reminded us to become active participants. The presentation might have been titled “Community: How to use money to build and maintain it.” We learned that economic justice is both a social and moral issue. A public bank might just help us build and maintain community. A public bank focuses local money on local projects. Instead of paying big banks to hold the assets of Santa Fe, it would serve as the savings bank for Santa Fe, and it would serve as the lending bank for Santa Fe city government projects. All the interest earned on loans would come back to the public bank for future loans to contribute to the community’s welfare and to economic justice here in Santa Fe.

George GambleSanta Fe

Follow The Money

The most exciting benefit of a public bank for Santa Fe is the fact that chartered banks actually create new money through a process called “fractional reserve banking.” When getting my MBA in finance, professors talked about it. Wikipedia, Bank of England and others have excellent online articles about this practice. It would multiply the amount of capital flowing through our community and supporting worthy projects several times over the initial invested capital.

Of course, we need pay attention to the city’s cash-flow management. Our city staff have been making valuable changes since the Public Banking Feasibility Study was completed one year ago. That, plus a public bank for Santa Fe, can create new, safe economic possibilities for a sustainable Santa Fe. It is important to remember that banks create money. No other financial intermediary can do that.

Alston C. LundgrenSanta Fe